The Myanmar kyat plummeted even further on Thursday as the country sank into a full-blown currency crisis triggered by the economic fallout from the military coup earlier this year.
The price of a US dollar on the unofficial market reached a high of around 3,000 kyat, currency sellers said, while faith in Myanmar’s currency collapsed and demand for safe stores of wealth rocketed.
Shortly before the military’s February 1 power grab, a dollar was worth around 1,400 kyat.
“The value of the Myanmar kyat has gone past the point of inflation and is very close to the point of hyperinflation,” one business owner said. “Because the root cause of this is the political situation, there is no way to control it.”
The crisis is driving up the cost of vital commodities like fuel and food. The price of gold has also spiked as savers, unwilling to trust banks or to hold kyat in cash, look to protect their wealth from the crisis.
One kyattha, or just over half an ounce, of the precious metal sold for 2,200,000 kyat on Wednesday, up from 1,300,000 kyat just before the coup, gold traders said.
The junta’s official exchange rate, which has fallen out of step with the actual market rate since late August, was 1,927 kyat per dollar on Thursday.
“Because of the massive demand in the market, sellers are naming whatever prices they want. Nobody can control it anymore,” a currency seller in Yangon said. “The foreign currency exchange market has been corrupted.”
Some currency traders have shuttered their businesses because of the shortage of dollars, while goldsmiths have also reportedly closed.
The junta-controlled Central Bank of Myanmar has tried to halt the kyat’s dive in recent weeks by releasing $200m of its foreign currency reserves, but it apparently does not have the resources to counter the overwhelming downward pressure from the market.
The junta has also restricted the import of vehicles in a separate bid to control the exchange rate.
Myanmar’s economy is set to contract by 18% this year amid a sharp rise in poverty levels and unemployment, the World Bank said on Monday.
At a press conference on Monday, coup leader Min Hlaing Aung said Myanmar could develop fast enough to surpass its ASEAN neighbours within 10 years if everybody worked together.
